Yangzijiang Shipbuilding: Riding the Waves of Success
Yangzijiang Shipbuilding (YZJ) has made headlines with their unexpected new orders valued at an impressive US\$2.63 billion for 21 new vessels, including 12 dual-fuel containerships. With deliveries planned from 2027 to 2029, this recent development has brought YZJ’s year-to-date (YTD) wins to a record US\$14.3 billion, surpassing expectations of US\$11.3 billion for 2024.
Management has confirmed these orders as firm, with options for additional contracts, indicating robust demand and capacity for further growth. A notable order includes six LNG dual-fuel 17K TEU containerships by Maersk. Moreover, firm freight rates continue to encourage fleet renewal and decarbonization, with containership freight rates remaining double those of late 2023.
Despite trading at a 30% discount to peers, YZJ presents a buying opportunity with a strong order book, deliveries extending to 2029, and a superior return on equity (ROE) of 27%. The recommendation is to ‘Add’ with a target price of S\$3.20, aligning with regional peers at 11x CY26F P/E. Potential risks include rising steel costs, order cancellations, and unfavorable policy actions against the Chinese shipbuilding industry.
Peer Comparisons: A Global Perspective
The report also offers a comparative analysis of various shipbuilding companies across different regions, providing insights into each company’s performance metrics.
Keppel Ltd
Keppel Ltd is recommended with an ‘Add’ rating and is projected to see a minimal EPS CAGR of 0.9% across the next two years, with a strong dividend yield of 5.0%. Their market cap stands at US\$9,080 million.
Capitaland Investment
Rated as ‘Add’, Capitaland Investment boasts a significant two-year EPS CAGR of 77.9% with a market cap of US\$10,222 million. Investors are likely to see a 4.4% dividend yield.
Seatrium Ltd
Seatrium Ltd also carries an ‘Add’ rating but is marked by a fluctuating EPS, indicative of its volatile market position. The company is noted for having a zero dividend yield, signaling a focus on reinvestment.
COSCO SHIPPING International
Although not rated, COSCO SHIPPING International is a smaller player with a market cap of US\$228 million. Detailed EPS forecasts are not provided, indicating a need for careful investor consideration.
China CSSC Holdings Ltd
China CSSC Holdings, with a robust market cap of US\$22,286 million, is not rated but projects a compelling two-year EPS CAGR of 64.0%, complemented by a dividend yield of 0.8%.
Yangzijiang Shipbuilding
YZJ, in comparison with its Chinese peers, reports a two-year EPS CAGR of 16.8% and a high dividend yield of 3.8%, reinforcing its attractive investment profile.
Korea Shipbuilding & Offshore
With an ‘Add’ rating, this company showcases a strong two-year EPS CAGR of 166.4%, indicative of potential rapid growth, and maintains a dividend yield of 0.0%.
HD Hyundai Mipo
HD Hyundai Mipo is noted for its substantial EPS growth, although specific dividend yield data is not disclosed, pointing to an aggressive growth strategy.
Samsung Heavy Industries
Samsung Heavy Industries is another key player, with a notable market cap of US\$6,879 million, though EPS data suggests variability in financial performance.
Hanwha Ocean
Hanwha Ocean exhibits a promising EPS growth trend, driven by a strategic focus on expanding its market presence and capacity.
Sejin Heavy Industries Co Ltd
Sejin Heavy Industries, not rated, reveals a promising EPS growth trajectory, bolstered by a favorable dividend yield of 2.6%.
Mitsui E&S Co Ltd
Mitsui E&S Co, while not rated, shows a declining EPS CAGR which may concern investors looking for steady growth. Its dividend yield of 0.7% remains a point of interest for income-focused investors.
Brookfield Corp
Brookfield Corp, with a robust US market presence, shows a high EPS CAGR and a solid dividend yield of 0.5%, indicative of a balanced growth-investment approach.
